Why Hamilton Lane (HLNE) is a Top Dividend Stock for Your Portfolio
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Hamilton Lane in Focus
Based in Conshohocken, Hamilton Lane (HLNE) is in the Finance sector, and so far this year, shares have seen a price change of 29.99%. Currently paying a dividend of $0.44 per share, the company has a dividend yield of 2.14%. In comparison, the Financial - Investment Management industry's yield is 3.14%, while the S&P 500's yield is 1.72%.
Looking at dividend growth, the company's current annualized dividend of $1.78 is up 11.3% from last year. In the past five-year period, Hamilton Lane has increased its dividend 5 times on a year-over-year basis for an average annual increase of 14.98%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Hamilton Lane's payout ratio is 53%, which means it paid out 53% of its trailing 12-month EPS as dividend.
HLNE is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $3.88 per share, with earnings expected to increase 16.17% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, HLNE is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Hamilton Lane Inc. (HLNE) : Free Stock Analysis Report
